2006-12-01 04:00:00 PDT Washington -- Two senior Bay Area congressmen sent warning shots Thursday to two giant industries -- 401(k) providers and private health insurance companies -- that they will be overseeing starting in January.

Rep. George Miller, D-Martinez, said the 401(k) industry, which manages about $2.4 trillion in retirement funds for 47 million participants, isn't doing enough to disclose fees that are eating up people's savings without them even knowing it. Miller, who will chair the House's Education and Workforce Committee when Democrats take over the House in January, said he plans hearings on the issue when he takes over.

And Rep. Pete Stark, D-Fremont, who will chair the House Ways and Means health subcommittee, charged that private Medicare Advantage plans that enroll about 5.6 million seniors are being overpaid billions of dollars for coverage the government can provide more cheaply. That, he charged, shows that the Bush administration is persisting in its goal of privatizing Medicare, an enormous part of the Social Security system.

The statements from Miller and Stark show how the relationship between many industries and Congress will change in January when Democrats assume control of both houses from Republicans. They also foreshadow possible battles if either man tries to move legislation imposing new restrictions or requirements on these powerful industries.

Citing a new Government Accountability Office study that he had requested, Miller said current laws about the disclosure of 401(k) management and administrative fees to consumers aren't strong enough.

"It's critical that workers' hard-earned savings not be wasted on excessive fees. Workers need complete, accurate and clear information about the total cost of different investment options so they can choose the ones that are best for them," Miller said in a statement. "They need to know exactly what fees they are paying so they can get the best deal."

Citing an example from the government report, he said that a 401(k) account with a balance of $20,000 would grow to about $70,500 in 20 years with a net return of 6.5 percent a year. But if that net return were cut by fees to 5.5 percent, that $20,000 would grow to just $58,400 after 20 years.

He said the difference in fees should be made more transparent to consumers, especially because the report estimated that 80 percent of 401(k) account holders aren't fully aware of the fees they pay.

The investment industry said full disclosure is already one of its most important goals for the burgeoning 401(k) industry, which is rapidly growing as traditional pension plans disappear.

"We've always argued for consistent and clear disclosure of all fees, management fees and administrative fees," said Ed Giltenan of the Investment Company Institute, a trade group in Washington. Management fees generally go to the investment companies for managing mutual funds and other investment vehicles, while administrative fees cover the running of individual 401(k) plans.

"Disclosure is an absolute bedrock of the 401(k) industry," he added. Saying it was way too early to tell, he wouldn't speculate about how the industry might react to any legislation Miller might propose.

Giltenan said 401(k) investors pay lower management fees for their mutual funds than do people who buy them as investments outside of retirement accounts.

Steve Zients, senior vice president for retirement plan services at mutual fund giant T. Rowe Price, said, "Miller's contention that these things should be disclosed is positive and good."

Zients pointed out that disclosure comes not only from investment companies but also from the corporate managers of the hundreds of thousands of individual 401(k) plans who have a responsibility to ensure that fees aren't too high.

While Miller said he will scrutinize an industry that helps ensure the financial security of millions of Americans, Stark is taking on an industry that insures their health.

The private Medicare Advantage industry sells Medicare plans to seniors that may offer more benefits in return for limiting patients' ability to choose their own doctors.

Stark has long been a critic of the industry, but soon he may be able to do something about it.

Boiled down, Stark's contention -- based on a new Commonwealth Fund foundation study -- is that the private firms are being paid 12.4 percent more per patient than government-run Medicare to provide the same level of services. In 2005, Medicare Advantage plans, originally created based on the contention that private industry could provide service for less than the government, were overpaid an average of $922 per enrollee, for a total cost to taxpayers of $5.2 billion.

The payments "are not a mistake," Stark charged. "Republicans are overpaying Medicare HMOs as part of a deliberate effort to shift beneficiaries into private plans. The Republicans' ultimate goal is the privatization of Medicare, complete with a voucher system that leaves seniors to fend for themselves," he added.

The industry questioned the methodology of the study Stark used to make his charge and said that Medicare Advantage plans actually save money by injecting competition into the Medicare system, which covers about 43 million Americans.

Figures from the America's Health Insurance Plans trade group estimate that Medicare Advantage participants save on average $82 a month, compared to what they would pay in the traditional Medicare program. That comes to total savings of more than $6.8 billion annually, the group estimates.